Mark Gomes'  Instablog

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I always appreciate the positive feedback from investors. Helping you make money is why I do this (of course, showcasing the capabilities of my company, Pipeline Data, to potential customers is also a motivation).

That being said, I always pay heed to negative feedback too. Based on personal experience with my investment methodology, if you're not making money on my picks, I've probably done a poor job of explaining how to do so.

It's not a simple matter of buy-and-hold. You have to do at least a little work yourself! For starters, you can see my ongoing comments on any covered company by tracking my Comments and/or Instablog. Those sections allow you to click on the ticker symbol(s) you care about and see my commentary regarding those stocks.

By design, my picks are often focused on unknown, unloved, or even hated stocks. After a careful screening process, I only choose stocks that I believe will reward investors for navigating its three major investment cycles, which I define as 1) Great Find, 2) Wait Time, and 3) Gold Mine. These are my official ratings. You want to be long during the Great Find and Gold Mine stage, but much more cautious during Wait Time. I highly recommend reading more about this here. It's critical to maximizing your returns.

Readers who don't keep up with my articles, instablogs, and comments risk large losses. I take a lot of heat from these folks when one of my picks reports weak results or if the shares experience a sharp correction. I can take heat, but prefer to see everyone profit, so pay attention! FYI, I provide free real-time alerts on Twitter every time I post something important. Follow me there (My handle is @bostongekko).

Another thing to remember is even though my series is entitled "Poised to Triple" I do not expect every pick to triple (that would be foolish). More accurately, I pick stocks that I believe are poised (in other words, "have the potential") to triple. Many don't, but many do...and many more double or get acquired. (see http://seekingalpha.com/article/264012-eyeing-stocks-that-are-poised-to-triple for examples). These winners more than make up for the duds, which will always be a part of a portfolio that takes calculated risks on companies that may or may not succeed in turning things around.

Thus, I recommend a couple of tactics:

1) Shed the losers before they implode. When I pick a stock, it is generally at a price that I believe is near the floor of where it should go. A significant decline from those levels is usually a sign that I've made a bad pick. If one of my picks drops 20% from its initial price, it usually goes much lower. So, Rule #1 is sell your losers if they drop 20%. Your winners will more than make up for it!

2) Another method I often use is to constantly update each stock's potential risk and reward. If you buy a stock at 10 that could go down to 5 or up to 20, you are taking on $5 of risk in pursuit of $10 of reward. Too many investors lose sight of this equation as it changes. For example, if the same stock jumps to $18, your risk is now $13, while your potential reward is only $2.

For shorter-term trades on longer-term investments, I utilize risk/reward charts like the one you see below:

(click to enlarge)

If you're a day trader or a technical analyst, you probably have tools that are far more sophisticated than this (FYI, I was a technical / quant analyst from the mid-80s until the mid-90s). As a long-converted fundamental analyst, I simply attempt to find the longer-term path my stock is likely taking (depicted by the two long parallel lines).

It's important that the slope of those lines is sustainable (in the case of AMZN, the lines are moving up at a rate of 19% per year, which feels quite sustainable to me). If the lines are too steep, you are likely drawing a short-term trend (depicted by the short parallel lines in bold). Unsustainable trends generally end in a reversal, as it did in this case.

By following these tips, you can find better entry and exit points.

FYI, many of my picks will entail bottom-fishing among small-cap value stocks. Performance-wise, this equity asset class has dominated all others for 6 decades running. It is also the class with the least amount of institutional competition. Thus, you're not dealing with companies are being closely researched by over by 500 MBAs.

You want to avoid this sort of competition if you can help it. Trust me. My company (Pipeline Data) invests thousands of dollars every week into research to help buy-side institutions to predict the quarterly performance of larger companies like ORCL. You don't want to compete with our resources, experience, and expertise on that front ;^)

Focusing on smaller companies gives smaller investors a distinct advantage. Such an advantage is rare in today's market environment.

This is where the likes of Warren Buffet cut their teeth. In fact, he has said that he would never have abandoned this asset class if he hadn't become too rich to be able to invest in such small companies (his typical position often represents several-times the entire market cap of my picks!). I hope this helps to illustrate the point.

Good Luck & Kindest Regards,

Mark G

p.s. One last thing -- I donate a fair amount of time to this endeavor. As such, I have carefully chosen how to allocate this time. I don't provide timing calls on when to sell, nor do I disclose my specific trading actions. Suffice it to say that I adhere tightly to the risk and reward methods described herein. Also, I tend not to reply to the deluge of emails I receive. Please take no offense. Posting in the comments section is your best bet for getting a response.

Everything else about my methodology and service to SeekingAlpha is detailed above & in my articles / instablogs. If you disagree or simply don't like my chosen way, I respect that and take no offense. Cheers.